With tariffs pushing price increases, some CEOs express concerns

Manufacturing Summit panelists discuss strategic challenges of changing trade environment [PHOTO GALLERY]

Harley-Davidson Inc. generated international headlines in its efforts to navigate an evolving trade and tariff environment this year, but it is clear the Milwaukee-based motorcycle maker is not alone in having difficulties with President Donald Trump’s actions on trade.

After Trump placed tariffs on steel and aluminum, the European Union hit Harley’s heavyweight motorcycles with retaliatory tariffs. The company responded by announcing it would shift production of bikes destined for Europe to overseas facilities, drawing the ire of Trump.

On Thursday, panelists at the annual BizTimes Next Generation Manufacturing Summit expressed their own frustrations with the tariffs, which have also included billions on imports from China. The panelists also discussed workforce challenges and the increasing use of automation.

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Frank Carroll, chief executive officer of Hartford-based Broan-NuTone, lamented that his company is being put at a disadvantage despite doing nearly of all its manufacturing in the U.S.

The company gets most of its steel and aluminum from U.S. suppliers, but tariffs pushed prices higher across the board, Carroll said. Motors the company uses in products like bathroom fans are only available from Chinese suppliers but are also subject to tariffs. Carroll said competitors with most of their manufacturing in China are not being hit in the same way because the tariffs do not include the final products.

“They get to buy China steel and aluminum, they get to make their products in China, they get to buy their motors in China and they get to send it to the U.S. and they don’t get a tariff,” Carroll said. “We get stuck with the tariff and we’re manufacturing in the U.S., in Hartford, Wisconsin with 900 people standing on the line. That’s not what the administration meant to do.”

Aaron Jagdfeld, chairman, president and CEO of Waukesha-based Generac Holdings Inc., said that there are many components that cannot be sourced in the U.S. and even companies with global supply chains have limited options.

“Unfortunately, there’s only so much you can do,” he said. “I think the biggest lever most companies are going to pull, because of the way this is happening and the speed at which it is happening, is price.”

Jagdfeld said the reality is price increases to cover the tariff will ultimately be passed along to consumers.

“I think the biggest fear that I personally have is what does that do to this economy,” he said.

“It’s fast moving, you’ve got to stay really plugged in,” Jagdfeld added. “But let’s hope it’s all a big negotiating tactic in the end. I don’t know if it is.”

Carroll and fellow panelist Keith Coursin, president of Germantown-based Desert Aire, both said their companies had or are planning to increase prices to account for the increased costs.

Desert Aire, which makes dehumidifiers for large applications, has found significant growth in recent years in the cannabis market. With Canada legalizing the drug on a national level, many of the company’s customers are in Canada but so are major competitors.

“We have to be very, very strategic in when we’re doing our price shift because we could see sales volume drop very, very quickly,” he said.

While one aim of the increased tariffs is to protect U.S. manufacturers and other industries, Coursin said he has seen other unintended consequences.

“I recently had the opposite effect of customers in Canada saying, ‘I will not buy American product, period. You no longer can quote to us,’” he said.

Harley-Davidson Inc. generated international headlines in its efforts to navigate an evolving trade and tariff environment this year, but it is clear the Milwaukee-based motorcycle maker is not alone in having difficulties with President Donald Trump’s actions on trade.

After Trump placed tariffs on steel and aluminum, the European Union hit Harley’s heavyweight motorcycles with retaliatory tariffs. The company responded by announcing it would shift production of bikes destined for Europe to overseas facilities, drawing the ire of Trump.

On Thursday, panelists at the annual BizTimes Next Generation Manufacturing Summit expressed their own frustrations with the tariffs, which have also included billions on imports from China. The panelists also discussed workforce challenges and the increasing use of automation.

This slideshow requires JavaScript.

Frank Carroll, chief executive officer of Hartford-based Broan-NuTone, lamented that his company is being put at a disadvantage despite doing nearly of all its manufacturing in the U.S.

The company gets most of its steel and aluminum from U.S. suppliers, but tariffs pushed prices higher across the board, Carroll said. Motors the company uses in products like bathroom fans are only available from Chinese suppliers but are also subject to tariffs. Carroll said competitors with most of their manufacturing in China are not being hit in the same way because the tariffs do not include the final products.

“They get to buy China steel and aluminum, they get to make their products in China, they get to buy their motors in China and they get to send it to the U.S. and they don’t get a tariff,” Carroll said. “We get stuck with the tariff and we’re manufacturing in the U.S., in Hartford, Wisconsin with 900 people standing on the line. That’s not what the administration meant to do.”

Aaron Jagdfeld, chairman, president and CEO of Waukesha-based Generac Holdings Inc., said that there are many components that cannot be sourced in the U.S. and even companies with global supply chains have limited options.

“Unfortunately, there’s only so much you can do,” he said. “I think the biggest lever most companies are going to pull, because of the way this is happening and the speed at which it is happening, is price.”

Jagdfeld said the reality is price increases to cover the tariff will ultimately be passed along to consumers.

“I think the biggest fear that I personally have is what does that do to this economy,” he said.

“It’s fast moving, you’ve got to stay really plugged in,” Jagdfeld added. “But let’s hope it’s all a big negotiating tactic in the end. I don’t know if it is.”

Carroll and fellow panelist Keith Coursin, president of Germantown-based Desert Aire, both said their companies had or are planning to increase prices to account for the increased costs.

Desert Aire, which makes dehumidifiers for large applications, has found significant growth in recent years in the cannabis market. With Canada legalizing the drug on a national level, many of the company’s customers are in Canada but so are major competitors.

“We have to be very, very strategic in when we’re doing our price shift because we could see sales volume drop very, very quickly,” he said.

While one aim of the increased tariffs is to protect U.S. manufacturers and other industries, Coursin said he has seen other unintended consequences.

“I recently had the opposite effect of customers in Canada saying, ‘I will not buy American product, period. You no longer can quote to us,’” he said.

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